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00:00 Speaker A
I want to ask you about two other companies in your coverage that also have been affected by some things going on with the administration in a different way. I’m talking about Visa and MasterCard because of, um, the rhetoric that we’ve heard from the president about the 10% credit card rate cap. And what’s interesting here is pretty much everybody we’ve talked to has said, it ain’t going to happen, right? The banks are against it. They don’t think it’s a good idea. It’s not getting traction in Congress. And yet, we have still seen some of these stocks under pressure. In the case of Visa and MasterCard, kind of like a delayed pressure. What do you think is going on there and is there any threat here?
00:52 Speaker B
Well, I don’t think the the news on the the 10% interest rate cap was was all that uh surprising candidate Trump had talked about this uh on the campaign trail last in 2024. Uh and there was a a Senate uh uh bipartisan legislation that was proposed uh Sanders and and Holly last February as well. uh you know, talking about that. So, you know, it I I think it is just a a long uh road. I mean even Speaker Johnson has talked about the, you know, the heavy lift that this is likely uh to be. Uh I’m not clear on on a one-year uh a deal uh for for this and what that you know, will necessary accomplish. Uh I I expect there’s probably some sort of a compromise in store which means that, you know, banks have uh talked about being more innovative, um, more inventive about the credit card offerings. I think there could be more more tearing, uh with credit scoring and and so forth. not everybody needs to pay that, you know, 16 to 20% or or higher on their credit card. So I think you could bring that average rate down without without doing much. I think the industry is going to be uh you know, extremely vocal uh about the uh you know, the the downsides of this when uh when you look at credit availability and and so forth that it’s, you know, US credit card lending went over a trillion dollars in in 2023, it’s now about 1.2 trillion. I think you could, you know, there needs to be more education on how that’s that’s a really imperfect form of financing for uh for consumers, uh generally. Uh but I think Mastercard and Visa as the processing networks are a little bit, you know, removed from this. Uh they don’t have to worry about the the lending side. uh, you know, to the extent that it upsets the business model a bit but there’s been such a a long running uh transfer of uh uh to digital payments from cash and and uh and checks that uh they’ve got a, you know, very long runway for uh for growth on the processing side and I think that’s, you know, that’s behind uh some of this. But I agree the headline risk uh remains here and uh we’re going to have to see how that that that plays out at the the regulatory level.